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Employers fear Obamacare will hike health costs

(MoneyWatch) Obamacare may cost more than experts previously thought, according to a survey of 900 employers released Wednesday. As companies scramble to prepare for a wave of new health care rules that go into effect next year, an increasing number have become pessimistic about the cost, according to Mercer, a benefits consulting firm.

Roughly one in five employers (19 percent) now expect that health care costs will rise by more than 5 percent as the result of the law. When asked the same question two years ago, only 14 percent of respondents thought the Affordable Care Act would significantly raise costs. Moreover, just 9 percent of employers still think the law will have little or no impact on costs. When asked the same question two years ago, a quarter of the respondents thought the impact would be minimal. Almost a third of employers say they still can't predict the impact.

This confusion is understandable, says Mercer President and CEO Julio A. Portalatin. Even though employers can calculate how many workers will be newly eligible for coverage, they can only guess at how many will choose to buy coverage. 

All individuals are required to have health coverage in 2014, but the penalty for failing to enroll in an insurance plan is a relative pittance in 2014 -- just $95 per individual or 1 percent of household income, whichever is greater. Since that penalty is likely to be far smaller than even the employer-subsidized cost of insurance, employers speculate that many workers who didn't choose to get coverage in the past will remain uninsured.

By the same token, employers may be making the choice more difficult by opting to pass on an increasing amount of the cost. Nearly one-third say they will require a bigger contribution for dependent coverage next year and 13 percent will hike the contribution for employee-only coverage. As a result, just 17 percent of employers are budgeting for an increase in health care enrollment.

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